Licensing delays and the dredging up of decades-old incidents aside, the new criminal offense record check for mortgage brokers and lenders has not yielded any license revocations, according to those in the industry.

The Criminal Offenders Reporting Index, or CORI, was implemented for the first time this year as a requirement for mortgage brokers and lenders seeking to renew their licenses or gain new ones through the Massachusetts Division of Banks. CORI, a lifetime criminal offense background check, is a requirement for the other nine types of licenses issued through the Division of Banks as well. The division gained access to CORI information last fall.

“The predominant impact has been very moderate,” said James Dougherty, president of the Massachusetts Mortgage Association. In fact, to date, no CORI checks have resulted in a cease-and-desist order or revocation of any licenses, and in all instances licenses were renewed for a full term.

But a computer glitch and confusion with the license applications all caused renewals to grind down to a “painfully slow” process, according to Dougherty, a delay which both industry leaders and the division of banks say shouldn’t happen again.

Massachusetts Division of Banks Senior Deputy Commissioner Steven Antonakes wouldn’t give an exact count of how many CORI-related incidents were uncovered, except to say that “a good number” of incidents required informal conferences with division staffers related to the license in question.

The majority of hearings, however, stemmed from confusion with the renewal application questionnaire, he said.

According to Dougherty, a series of yes or no questions on the application asked about traffic and other violations that had occurred in the last 12 years. Another more open-ended question followed, which many applicants took to follow the pattern of the previous questions as referring only to the past 12 years.

They were wrong. The question referred to their entire lifetimes. So everything from traffic violations to more serious offenses that showed up on the CORI check at all caused applicants who had checked “no” to be called in to the Division of Banks for a conference due to their “potential untruthfulness,” said Antonakes.

“There were a couple of issues here, and we had a not insignificant number of them. But the type of issue that was most common was failure to disclose information about a criminal record in the application process,” he said. “The application has perjury penalties, and lying on an application typically doesn’t speak well of someone in the industry.”

Those called in for a conference were not asked or required to bring any particular type of evidence; rather, they were given the opportunity to provide mitigating information or to simply comment or explain the past incident or their answers on the questionnaire. Some brought lawyers, while others represented themselves, Antonakes said. Only a small number of hearings remain.

“From what I understand, the Division of Banks was very receptive to hearing explanations. They’ve been working with us,” said Howard Miselman, chairman of the MMA.

He praised the Division of Banks for allowing those awaiting hearings to continue to do business until the issues were resolved one way or another.

“It would have been a big problem. People would have been out of business, out of work. I don’t think they expected the delay,” Miselman said.

“The delay was the big issue. It should never happen again,” he added.

Miselman guessed that thousands of CORI inquiries were requested of the criminal systems board, causing a backlog in the entire licensing process. According to Miselman, the CORI checks were performed not only on owners of mortgage businesses, but also on key personnel.

Once the renewal deadline of June 1 had passed, those still awaiting hearings who continued doing business without a renewed license ran into some roadblocks, Dougherty said.

“When someone needed to go out and create a new relationship with a wholesaler, it was a problem if the wholesaler wasn’t from the state and wasn’t plugged into this new problem. They would be reluctant to enter into any agreement where it was necessary to submit a copy of your license,” said Dougherty.

Otherwise, he added, problems have been minor in nature.

“There are reasonable benefits to knowing the background of individuals licensed to do business. But that has to be tempered with some reason,” said Dougherty, referring to those industry professionals who had to answer to incidents occurring 30 years beforehand. Some simply forgot or thought that such incidents were erased from records after a certain time, he said.

“The requirement needs some refinement to accomplish the goals it’s setting out to accomplish without being overly aggressive,” Dougherty said.

Antonakes stressed that, other than questionnaire confusion, the only incidents requiring hearings would be those dealing specifically with honesty or fraud, though he would not specify exactly what kinds of incidents came up in this renewal cycle.

“There have been a good number, a fair number, of incidents, none of which have risen to the level of having licenses revoked,” he said.

“We believe CORI checks are relevant to any licensing process involving honesty and integrity,” he added. “This is another tool to use to let consumers know they’re dealing with honest businesses, as the majority of businesses are.”

‘A Bit Too Far’
The Division of Banks will subject each new license and renewal applicant to a CORI check once every year, Antonakes said. More timely processing is expected next year, as records for only one year, as opposed to a lifetime, will have to be investigated. Also, the division aims to bring more services such as license renewal to the Internet, which he said would speed up the process.

And to avoid further confusion on the renewal application, the questionaire will be revised and not be as open-ended, said Antonakes.

While Antonakes maintained that CORI was implemented simply because it is appropriate in an industry demanding honesty, Miselman recalled a highly publicized case of a few years ago in which someone licensed by the state had a list of past convictions involving his integrity.

“Everyone wondered how he got a license … This was the quick, easy fix,” he said of CORI.

Beyond what CORI can do, the best way to protect consumers from predatory lending or dishonest practices comes down to the ethics of the company itself, said Miselman.

“It’s the management of the company, the ethics and style created by management, the techniques and screening procedures, checking references and how someone left their last company. I think that does more,” Miselman said.

“Some [association] members feel this may be going a bit too far. But for the majority of our members, it really doesn’t affect them,” Miselman said. “For 98 percent of the people who go through the process, it’s just one more thing they have to do to get a license.”